£330m expected overspend on homelessness services could bankrupt us, London boroughs warn

Local authorities in the capital are expected to overspend on their homelessness budgets by at least £330m in 2024-25, according to figures from London Councils.

The group, which represents London’s 32 boroughs, has warned that worsening homelessness statistics represent the “single biggest risk” to boroughs’ finances and is pushing them towards bankruptcy.

Boroughs in the capital originally allocated almost £600m to their homelessness budgets for 2024-25, but analysis from London Councils shows they are projected to spend more than £900m in total on homelessnes and temporary accommodation provisions.

This 60% increase on the original budget could push more councils to seek emergency financial support from the government, increasing the risk of issuing Section 114 notices, which are used to declare a financial emergency.

Local authorities have highlighted a growing mismatch between their temporary accommodation costs and government subsidies. In 2023-24, the gap was around £96m, but London Councils estimates a difference of £140m for 2024-25 – a 45% increase.

According to the umbrella body, the number of homeless Londoners requiring temporary accommodation has reached a record-high of 183,000, or one in 50 London residents.

Boroughs collectively spend £4m a day on temporary accommodation. Landlords ending their arrangements with boroughs to sell their property or rent it on the open market has resulted in an increased use of more expensive nightly shelter, including hotels.

Grace Williams, London Councils’ executive member for housing and regeneration, said: “The worsening homelessness emergency is devastating the lives of too many Londoners and represents the single biggest risk to boroughs’ finances.

>>See also: Number of households with children in temporary accommodation reaches record high

“Homelessness spending is fundamentally driven by factors outside our control. Boroughs have a legal duty to provide homelessness support – and we’re seeing homelessness numbers skyrocket while accommodation costs spiral.”

London Councils has called on the government to reduce homelessness pressures in the upcoming Spending Review through additional investment in affordable housing and fixing the temporary accommodation subsidy gap.

The group’s analysis comes as Westminster Council finalised plans to buy 368 temporary accommodation properties from social landlord A2Dominion. The 37,000-home housing association said the sale would enable it to focus on improving its remaining homes and customer services.